Configuration of G/L Accounts in Event-Based Revenue Recognition
Event-Based Revenue Recognition provides automated revenue recognition for different business processes in S/4HANA Cloud. The purpose of this blog is to explain how to configure revenue recognition accounts in the area of Event-Based Revenue Recognition.
1. Configuration of Revenue Accounts in Event-Based Revenue Recognition
This chapter explains how to configure revenue accounts in Event-Based Revenue Recognition for products and services sold. The logic in Event-Based Revenue Recognition is to assign the revenue accounts identified for sales transactions to Event-Based Revenue Recognition sources and assign sources and posting rules to revenue recognition accounts, e.g. accruals, deferrals, revenue adjustments. In this way, revenues can be adjusted as deferrals or accruals according to the effect of postings. As part of the SAP Best Practices, the assignment sources, assignment rules, and revenue recognition accounts are delivered. In case you need to replace the revenue accounts with your own accounts, several places that are relevant for the Event-Based Revenue Recognition account assignment must be adapted in order to get the correct results. The configuration flow below is recommended to help you do the configuration in a good way.
Overview of the configuration flow
(1) Necessary revenue account determination in Sales/Distribution (SSCUI ID 100297)
(2) Source assignment for Event-Based Revenue Recognition (SSCUI ID 102530)
(3) Assign posting rule for the source in Event-Based Revenue Recognition (SSCUI ID 102530)
(4) Maintain financial statement version (SSCUI ID 102669)
In this chapter, we take the material “P002” as an example to explain how to configure the revenue recognition account following the configuration flow.
1.1 Necessary Revenue Account Determination in Sales/Distribution
Event-Based Revenue Recognition needs the revenue accounts determined by the account determination in Sales/Distribution. If a financial document is relevant for revenue recognition, the account determination in Sales/Distribution takes place during the e.g. Sales Order/Billing Document Request is created. Event-Based Revenue Recognition is then able to trigger an account determination which is relevant for the revenue recognition posting itself. Hence, you first need to define revenue accounts in the account determination in Sales/Distribution. A revenue account for a material sold is determined based on certain combinations of account key, customer account group, and material account group. You start the application “Manage Your Solution”, select the application “Chart of Accounts”, and go to the step “Automatic Account Determination” (SSCUI ID 100297).
Figure 1: SSCUI “Automatic Account Determination”
Select the area for sales billing.
Figure 2: SSCUI “Automatic Account Determination”
Go to the next step to maintain the parameters for account assignments. Taking material P002 as an example, you fill in the additional parameters Account Assignment Group for Customer “01” (Domestic Revenues), Account Assignment Group for Material “X1” (SP-Time) and Account Key “ERL” (Revenue).
Figure 3: SSCUI “Automatic Account Determination”
Then, on the next screen, you fill in the G/L account 4191000 for sales revenues of the material group X1 for domestic customers. This means that when a billing document is created for the material P002, the system posts sales revenue to G/L account 41910000.
Figure 4: SSCUI “Automatic Account Determination”
If there is any parameter mentioned above for a material missing, the system cannot find the right G/L account using the Condition Table 001. Then it goes to a very general condition and finds another G/L account which is not correct. In the example below, no field is maintained for the material sold, the system uses general condition table 004 and finds the G/L account 41000000, which is not a revenue account and not assigned to the source of Event-Based Revenue Recognition. In this case, there is no adjustment reflection from Event-Based Revenue Recognition regarding the billing posting of the material.
Figure 5: SSCUI “Automatic Account Determination”
1.2 Source Assignments for Event-Based Revenue Recognition
After the correct revenue account is determined for the material sold, you maintain the settings for Event-Based Revenue Recognition. Start the application “Manage Your Solution”, select the application “Revenue Recognition” and go to the step “Maintain Settings for Event-Based Revenue Recognition” (SSCUI ID 102530).
Figure 6: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
For example, the revenue account for material P002 in Sales/Distribution is G/L account 41910000. You assign this revenue account to the revenue source of Event-Based Revenue Recognition. Click the step “Source” and select the source line ID “YR1” (Revenue-Service) and go to the next level.
Figure 7: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
Here the G/L account 41910000 is assigned to the source ID “YR1”. In this way, the mapping of the G/L accounts for sales revenue and G/L accounts in Event-Based Revenue Recognition is set up. Postings to G/L account 41910000 are considered as the source for Event-Based Revenue Recognition postings.
Figure 8: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
1.3 Assignment Rules for Event-Based Revenue Recognition
Go to the second step “Assignment Rules”. Here you define the rules for account assignment. There are pre-defined rules for supported business processes. For example, select the assignment rule “COSPTM” for Time & Expenses contract type and navigate to the next level.
Figure 9: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
Here you combine the source assignment and the assignment rule defined. This allows you to specify the line items that are input values for the posting rule. You can also specify a usage for the assigned values. For example, the revenue account G/L 41910000 is the domestic revenue account for the material P002, and it is assigned to the source ID “YR1” (Revenue-Service). The source “YR1” is the input value for revenues for the posting rule “COSPTM”. The source is then assigned to the usage “Revenue for Revenue Recognition Processing” which defines the accounts deferred revenue, accrued revenue, and revenue adjustment. Here you maintain the G/L account 13811100 deferred revenue, G/L account 13711100 accrued revenue, and G/L account 44401100 revenue adjustment for the source YR1. In case a revenue posting to G/L account 41910000 happens, Event-Based Revenue Recognition generates deferred revenue and posts to G/L account 13811100 and G/L account 44401100.
Figure 10: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
1.4 Maintain Financial Statement Version
The semantic tags of the financial statement version YPS2 are used for Event-Based Revenue Recognition reporting. In case you change any accounts in General Ledger and Event-Based Revenue Recognition, the financial statement version YPS2 should be updated in order to provide correct reporting. You can use the app “Manage Financial Statement Versions” (App ID: OB58) in General Ledger Accountant to maintain the financial statement version. Alternatively, you can go to the SSCUI “Define Financial Statement Versions” (SSCUI ID: 102669).
Figure 11: SSCUI “Define Financial Statement Versions”
In the overview “Financial Statement Versions”, select the financial statement version YPS2 which is assigned to Event-Based Revenue Recognition. Then, click the button Financial Statement Items.
Figure 12: SSCUI “Define Financial Statement Versions”
Here the structure of the financial statement version YPS2 is displayed. Select the node Rev Recognition Balances Accounts and click Expand Subtree. Then you see that there are six nodes Accrued Revenue, Deferred Revenue, Accrued Cost, Deferred Cost, Unbilled Revenue, and Manual Provision B/S. You can then assign revenue recognition accounts to the relevant nodes.
Figure 13: SSCUI “Define Financial Statement Versions”
Select the node and click Assign Accounts. For example, in the previous step, the account 13811100 is maintained as the deferred revenue account for the material P002. In this step, you need to assign this account to the node Deferred Revenue.
Figure 14: SSCUI “Define Financial Statement Versions”
With release CE2008, for companies that have the requirement to distinguish several WIP accounts for Time and Expenses and match the revenue adjustments accounts to the WIP accordingly, 6 new empty source lines are added in SAP Best Practices Content of Event-Based Revenue Recognition. As a user, you have the flexibility to configure revenue recognition by different revenue sources for projects of contract type Time and Expenses or Usage-Based Billing. You can change the description of the new source lines based on your business needs. The new lines are assigned to usage 100, 400, and 401 in assignment rule COSPTM-Service Time and Material DIP based.
Figure 15: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
We recommend users to follow the steps described above to complete the necessary customizing settings in order to use the new source lines. The necessary customizing settings include:
(1) Change the GL accounts in Sales/Distribution
(2) Map same GL accounts to the respective new source lines
(3) Maintain the revenue recognition accounts for new source lines in assignment rule COSPTM-Service Time and Material DIP
(4) Add these revenue source GL accounts to Financial Statement Version YPS2 to the existing line for Revenue and Deduction
For new customers in CE2008, the new source lines are available by default. For existing customers, the new source lines are not available automatically via the 2008 upgrade. Based on your business needs, the same can be supported via expert configuration.
2. Configuration of Cost Elements in Event-Based Revenue Recognition
The similar logic should be followed to assign cost elements to Event-Based Revenue Recognition.
Overview of the configuration flow
(1) Maintain Cost Element Group
(2) Source Assignment for Event-Based Revenue Recognition (SSCUI ID 102530)
(3) Assign Posting rule for the Source in Event-Based Revenue Recognition (SSCUI ID 102530)
(4) Necessary mapping in other related areas
In this chapter, we take time recording costs as an example to explain how to assign cost accounts to Event-Based Revenue Recognition.
2.1 Maintain Cost Element Group
The costs, which are the inputs for the sources of Event-Based Revenue Recognition, are generated from many activities like purchasing, time-recording, and expenses. For each activity, a G/L account is determined to post costs. For some G/L accounts, a cost element group is used to group cost elements with similar characteristics. These G/L accounts and costs elements are then assigned to the sources of Event-Based Revenue Recognition.
In professional service, the cost element group YBPS is used for cost activities. You use the app “Edit Cost Element Groups” to assign G/L accounts to a cost element group YBPS. The role of the app is Overhead Accountant. In the initial screen of the app, fill in the cost element group YBPS.
Figure 16: App “Edit Cost Element Groups”
The structure hierarchy of the cost element group YBPS is then displayed. Click the button Expand All.
Figure 17: App “Edit Cost Element Groups”
The cost element YBPS_BILL contains billable costs. Postings to the G/L accounts that have been assigned to this cost element are considered by Event-Based Revenue Recognition as billable costs. On the contrary, the cost element group YBPS_N000 stands for non-billable. Postings to the G/L accounts that have been assigned to this cost element group are not considered by Event-Based Revenue Recognition. For example, if you want to record entertainment costs that are non-chargeable for a customer project, you need to assign the G/L account for your entertainment costs to the cost element group YBPS_N000. In this way, the costs will not be taken into consideration of the percentage of completion (POC) calculation for cost-based fixed price projects.
You can click every node to check the G/L accounts assigned to the cost element group. If you create your own G/L account for costs and expenses, it is very important to map the G/L account to the corresponding cost clement group in this structure. In this example, you create a new G/L account 94308000, you need to map it to the cost element group YBPS_E001 so that the expenses can be considered by Event-Based Revenue Recognition.
2.2 Source Assignment for Event-Based Revenue Recognition
After cost element groups or G/L accounts are maintained, go to the SSCUI of Event-Based Revenue Recognition to assign the accounts to the sources for Event-Based Revenue Recognition.
Figure 18: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
Select the step 1 “Maintain Settings for Event-Based Revenue Recognition” to check the sources for Event-Based Revenue Recognition. Click the source ID line YT0, which is the source of time recording costs.
Figure 19: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
Go to the next level Assign Cost Elements and Accounts. You assign the cost element group YBPS_T000 to the source ID YT0.
Figure 20: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
2.3 Assignment Rules for Event-Based Revenue Recognition
Go to the next step “Assignment Rules” and select the assignment rule COSPTM for time and materials.
Figure 21: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
Here the usage 200 “Cost capitalizable and POC relevant for recognizing revenue” is assigned to the source YT0. It means that the cost elements assigned to YT0 are relevant for revenue recognition processing. You can then maintain the accounts for deferred costs, accrued costs, and cost adjustments for the source YT0.
Figure 22: SSCUI “Maintain Settings for Event-Based Revenue Recognition”
Also, in all assignment rules, the source ID “YM0” appears at the very end of the table. It is used for the costs without revenue recognition processing, meaning Event-Based Revenue Recognition is not triggered by any postings to the accounts or cost elements that are assigned to this source. It has the entire cost element group YBPS assigned. For any costs which you need to record but not invoice, it must be included in YBPS. However, it has no impact on revenue recognition processing. You should also pay attention to the sequence of the sources because the system always reads from the specific source to the general source (top-down). Once the system finds any postings which belong to a source, it stops considering the lower sequence ones. Hence, the general one must never come before the specific one. The source YM0 should never be ahead of any cost sources. If the system does not find any cost source or postings which belong to the sources before it comes to YM0, it does not generate any Event-Based Revenue Recognition postings for the posted costs.
2.4 Necessary Mapping in Other Areas
For fixed price customer projects, you have to define resources that are used in the delivery of the projects. You have to also map relevant accounts where costs are posted for each resource ID to enable reporting of planned and actuals. If the mapping is missing here, the system cannot find planned values used to calculate the percentage of completion (POC) of a fixed price project. Hence, you see the error messages for revenue recognition.
Here we take travel expenses for accommodation as an example. The resource ID for accommodation is E001. The G/L account for travel expenses for accommodation is the account 61003000.
Go to the SSCUIs of “Customer and Internal Project Management”. Select the step 2 “Define Expenses” to maintain the necessary mapping.
Figure 23: SSCUI “Define Expenses”
Select the resource ID. For example, select resource ID E001 for Accommodation.
Figure 24: SSCUI “Define Expenses”
Click the step “Map Resources with Key Figures” to map the resource E001 for Accommodation with the key figure COST.
Figure 25: SSCUI “Define Expenses”
Select the Key Figure COST and go to the next step “Map Key Figure with G/L Account”. Here the resource Accommodation is mapped with the account 61003000 Travel expenses for Accommodation.
Figure 26: SSCUI “Define Expenses”
For T&E customer projects, what is also relevant is the cost element group defined in the DIP profile. It is predefined by SAP which costs are billable in the DIP profile. For any costs belonging to cost element group YBPS_BILL, it is relevant for billing of T&E customer projects. Also, the materials belong to the cost element are predefined. This is how the system knows whether an activity posting in T&E Customer Projects can be considered as billable. For more details about the activity types and service materials for project services, please read the blogs:
- Activity Types and Service Materials for Project Services
- Non-Time Related Materials for Project Services
Last but not the least, if customers want to discontinue from Event-Based Revenue Recognition for new sales orders, customer projects, or service documents, it can be easily done by unassigning the recognition keys for the line items maintained in SSCUIs of Event-Based Revenue Recognition.
SAP Help Portal: Event-Based Revenue Recognition
Event-Based Revenue Recognition Cookbooks on SAP Activate Methodology:
Thank you Chenchu!
nice article, very helpful
Really nice one! Great job!
Thank for sharing!
Thank you for sharing input on EBRR Configuration!
My only comment : where can I find the documentation regarding the added source lines from SSCUI “Maintain Settings for Event-Based Revenue Recognition” ?
We would like to inform current customers of this new source lines in WIP Account Determination for EBRR.
''For new customers in CE2008, the new source lines are available by default. ***For existing customers, the new source lines are not available automatically via the 2008 upgrade. Based on your business needs, the same can be supported via expert configuration.''
Feras Al-Basha Chenchu Zhong Is there any doc available/KPA to sent to final customers ?
Hi Guillaume, thank you for the feedback. The information is documented in the SAP S/4HANA Cloud 2008: Stay Current for Finance, Revenue Recognition part (slide 9 - slide 11).
Thanks for sharing
We try to implement EBRR in an on premise S4/2020 system for a construction/energy conglomerate but there is no default customising for sources, RA keys etc. How can we obtain such info?
Thank you in advance.
Please have a look at the online documentations available in configuration activities of EBRR, such as usages, recognition keys, etc. You find explanations embedded in customizing steps in IMG. Hope this helps you.
Thanks and best regards,
you do not state what releases this functionality is available on. Is it 1809 compatible ?